'I didn't have that kind of money': Know your legal rights on rent increases

When Nandini Gokhale took over a friend's lease for a bedroom in an Ottawa home in 2020, she was happy she'd found an affordable space in the middle of the pandemic.

However, any relief quickly disappeared when her landlord notified her and her new roommates of plans to increase the overall rent by $2,000 within two months - a jump of between $500 and $900 per person.

“I had already moved my stuff in, and I didn't really have anywhere else to go,” said Gokhale. “But at the same time, I was still a student and also wasn't working, so I definitely wasn't going to be able to pay because I didn't have that kind of money.”

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Gokhale's story has become an increasingly prevalent one as a critical lack of supply continues to send rental prices soaring across the country.

The latest data compiled by Rentals.ca and market research firm Urbanation showed average asking rents for all property types surged 8.6 per cent over the course of 2023 compared with the year before. The average price for a one-bedroom apartment in a purpose-built building or condo clocked in at $1,932 in December, up 12.7 per cent from a year earlier.

Given these trends, many Canadians may be looking for ways to navigate rising rental costs, as well as what action to take when they suspect a landlord might be demanding more than they're permitted to.

What's legal for rent hikes

Though the rules and regulations around renting and tenants' rights vary from province to province, Laryssa Bogucki, a real estate and leasing lawyer at Manitoba-based law firm Taylor McCaffrey LLP, emphasized that tenants are able to push back on landlord demands.

“I think there is a misunderstanding that tenants may not have as much control as they do, or are afraid that challenging their landlord will get them evicted or on their 'bad side,”' said Bogucki.

“But there are processes in place to help them challenge a landlord, and it's important (that tenants) know about their rights.”

Though landlords have the right to raise the rent on their properties, certain standards still must be met by landlords.

For instance, in Ontario and British Columbia, if a residential property is currently occupied by a tenant, the rent can only be increased 12 months after the start of the tenancy or the most recent rent increase. Similar rules exist in Manitoba, where most rents can only be raised once a year.

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This year, for example, rent increases for applicable properties are capped at 2.5 per cent in Ontario and three per cent in Manitoba.

To raise more than that, a landlord needs permission from the body overseeing landlord-tenant disputes. Only upon approval would they be able to legally charge an amount above that threshold.

“To get that approval, they would need to show an increase beyond the standard,” said Bogucki. This might include substantial improvements to the building, like a new elevator or added amenities.

However, some provinces, such as Alberta, may have no limit on how much a landlord can increase the rent. Others may have a recommended (though not mandatory) guideline each year, as is the case in Quebec.

Even provinces that have some kind of protective legislation for tenants - such as Ontario - may have legislation that excludes certain properties from this increased protection, said Amri Murray, an Ontario-based paralegal whose practice includes landlord-tenant issues.

In particular, Murray noted Ontario properties that are occupied for the first time after Nov. 15, 2018 are not subject to the rent cap, and landlords can increase rent by any amount they choose - even doubling it, in some cases.

Murray and Bogucki both cautioned that individual cases may vary and renters should seek outside legal opinions if they're uncertain about what to do.

“That's why it is so important to have the education and information first, so that you can do something where the law isn't fully protecting you,” she said.

For example, “If you know you're going to need a property for three to four years, you can try to negotiate a lease that's longer than just a year to guarantee that lower rental price,” she said.

Increases can also only be made with a certain amount of notice. In Ontario, British Columbia, Manitoba and Quebec, for one-year leases, notice must be given at least 90 days or three months before the increase taking effect.

Challenging a rent increase

Gokhale said her knowledge on tenant rights and residential lease law in Ontario - which she had gained from joining a Facebook group on the subject years prior - is what pushed her to challenge her landlord's rental increase.

“I knew they had raised our rent past the legal limit, didn't give us the proper notice, and they already weren't carrying out their landlord duties at the time - like mowing the lawn and shovelling the driveway,” she said. “So I drafted an email back to them reminding them of the laws they weren't respecting.”

After a brief back-and-forth, her landlord backed down.

Though tenants are able to challenge rent increases at their province's respective landlord-tenant tribunals or boards, Bogucki noted that a tenant should try to discuss the issue with the landlord directly before formally challenging it.

A formal challenge is “a time-consuming process, and it can be stressful,” she said.

“It's best to avoid it if you can, but I'd also say that it's meant to be less formal than going to court. Anyone can appear in front of (them), so I don't think people are afraid to do that if it comes to that point.”

In Gokhale's experience, negotiations were easier because she and her roommates had leverage.

“Not only did we call them out for not properly taking care of the property, but we also brought up that we're responsible tenants who pay rent on time, and that we could find other ways to live on the property as `paying guests' of the people still technically on the original lease,” she said.

“In the end, I think they cared more about having responsible tenants, and knowing who those tenants were, than getting an extra $2,000 a month.”

The process for formally challenging a tribunal or tenancy branch differs from province to province, though generally involves filing an online application form.

However, Murray warned tenants should still pay the increased rental price while in the midst of a rental dispute.

“Because if they don't, and they happen to lose in their application, the landlord can say the tenant (has been) short paying their rent,” said Murray.

“But if they pay the new amount and win their application, then they would be entitled to apply to collect the amount they overpaid,” without risking potential negative consequences.

Despite a tightening rental market, Gokhale emphasized the importance for young tenants in particular to know their rights and not be afraid to enforce them.

“It's not a threat to tell them what you know, and to tell them what they should know as your landlords,” she said.

- Pascale Malenfant is a law student and freelance writer based in Montreal.

This report by The Canadian Press was first published Jan. 24, 2024.